From the CEO

Bucking the Layoff Trend With Creative HR

By Laurence O’Neil Mar 1, 2009
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March 2009 CoverIn recent months, the recession has hit home for many Americans as the number of mass layoffs reached a seven-year high. Today’s headlines portray a business landscape awash in pink slips.

As HR professionals, we know that layoffs can be a necessary cost-cutting measure. But we also know they can be counterproductive: increasing turnover especially among the best, most productive workers and creating anxiety among remaining staff, resulting in lower morale, reduced worker engagement and decreased productivity.

What haven’t appeared in the headlines are the positive steps some organizations are taking to retain their employees. Thanks to HR professionals’ leadership and expertise, many employers have found creative alternatives to cutting their workforces.

To help showcase the innovative solutions human resource professionals are adopting to address the current economic crisis—and encourage more progressive ideas—the Society for Human Resource Management (SHRM) created an "Economic Stimulus Prize" for the best HR strategies to help companies survive in today’s environment.

We identified 15 outstanding prize winners, each of whom will receive $1,000. Here, from two winners, are examples of creative approaches by SHRM members that helped avoid layoffs.

In Michigan, Oakland County faced a serious budget shortfall because of drastic reductions in its property tax revenue brought on by the declining housing market. As 80 percent of the county budget was made up of employee-related costs, county officials turned to the HR department, where HR leaders developed a "separation incentive" for employees who were eligible for retirement but remained in the workforce. A total 152 employees accepted the incentive. Beginning in 2008 and continuing into the 2009 and 2010 adopted budgets, county officials were able to delete 180 positions without laying off a single employee, and save $10.5 million.

Wisconsin-based Dorner Mfg. Corp. faced a downturn in demand for its low-profile conveyors, making it necessary for the company to implement a layoff strategy it previously used successfully.

Under the plan, all employees, including top executives, chose a one-week layoff period each quarter. When Dorner instituted this program during the economic downturn of 2001, all employees accepted it because it was an equal "hit" for everyone. Last fall, Dorner held companywide meetings to update everyone on how business had been impacted by the current recession and the intent to again implement the 2001 strategy. Everyone understood the need, and there has been total employee buy-in.

These examples show how HR professionals are meeting critical organizational needs during a time of economic stress. Other approaches worth considering include reducing the workweek and offering unpaid sabbaticals.

Read about all 15 "SHRM Economic Stimulus" winners.

Finally, use SHRM to connect with your 250,000 HR colleagues to tap into their creativity. Working together as a profession, we can write the story about HR helping to save jobs and make businesses stronger worldwide.

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